XML 22 R9.htm IDEA: XBRL DOCUMENT

2. Acquisition

12 Months Ended

Jun. 30, 2015

On February 26, 2014, the Company acquired substantially all the assets of a privately owned company consisting principally of inventory, fixed assets, and intangible assets related to the production and sale of a variety of laboratory and pharmacy balances and scales. The acquisition was pursuant to an asset purchase agreement whereby the Company paid the sellers $700,000 in cash, 126,449 shares of Common Stock valued at $427,500 and agreed to make additional cash payments based on a percentage of net sales of the business acquired equal to 8% for the period ending June 30, 2014 annualized, 9% for the year ending June 30, 2015, 10% for the year ending June 30, 2016 and 11% for the year ending June 30, 2017, estimated at a present value of $460,000 on the date of acquisition. Payments related to this contingent consideration for each period are due in September following the fiscal year. Contingent consideration payments made under all acquisitions during the years ended June 30, 2015 and 2014 amounted to $132,900 and $30,600, respectively.

The products, which are similar to the Company’s other Benchtop Laboratory Equipment, and in many cases used by the same customers, are marketed under the Torbal® brand. The principal customers are pharmacies, pharmacy schools, universities, government laboratories, and industries utilizing a precision scale. The products are sold primarily on a direct basis, including through the Company’s e-commerce site.

Management of the Company allocated the purchase price based on its valuation of the assets acquired, as follows:


Current assets	$144,000
Property and equipment	118,100
Goodwill*	115,400
Other intangible assets	1,210,000

Total Purchase Price	$1,587,500

*See Note 7, “Goodwill and Other Intangible Assets”.

Of the $1,210,000 of the acquired other intangible assets, $570,000 was assigned to technology and websites with a useful life of 5 years, $120,000 was assigned to customer relationships with an estimated useful life of 9 years, $140,000 was assigned to the trade name with an estimated useful life of 6 years, $110,000 was assigned to the IPR&D with an estimated useful life of 3 years, and $270,000 was assigned to non-compete agreements with an estimated useful life of 5 years.

In connection with the acquisition, the Company entered into a three-year employment agreement with the previous Chief Operating Officer of the acquired business as President of the Company’s new Torbal Division and Director of Marketing for the Company. The agreement may be extended by mutual consent for an additional two years.

Pro forma results

The unaudited pro forma condensed consolidated financial information in the table below summarizes the consolidated results of operations of the Company including its new Torbal Division, on a pro forma basis, as though the companies had been consolidated as of the beginning of the fiscal year ended June 30, 2014. The unaudited pro forma condensed financial information presented below is for informational purposes only and is not intended to represent or be indicative of the consolidated results of the operations that would have been achieved if the acquisition had been completed as of the commencement of the fiscal year presented. In addition, the Company was unable to obtain audited historical information and, therefore the information presented is based on management’s best judgment and the effects of the acquisition including amortization expense and excluding total acquisition related costs incurred of $79,500 for the year ended June 30, 2014:

	2014

Revenues	$ 7,623,200

Net loss	$ (69,300)

Net loss per share – basic	$ (.05)

Net loss per share - diluted	$ (.05)